The fallout from the financial crisis continues to unfold in courtrooms across the country. The latest drama surrounds a now-defunct Lehman Brothers’ affiliate and former company officials who continue to wage war in court over multiple lawsuits.
A group of former leaders from Lehman’s mortgage-backed securities issuer, Structured Asset Securities Corp. (SASCO), said in a court filing yesterday that the proposed release of $90 million in insurance money to settle an investor lawsuit against ex-CEO Richard Fuld and other Lehman executives may not leave enough money to cover a settlement in their own investor lawsuit.
Last month, Fuld and company had asked a U.S. bankruptcy judge to approve the release of funds from a directors’ and officers’ (D&O) policy to settle a three-year-old lawsuit seeking class action status on behalf of investors. The investment bank sold $31 billion of equity and debt between 2006 and 2008. The investors accuse Lehman of misleading them about the firm’s financial stability.
SASCO, however, isn’t on board with Fuld’s plans. With the looming specter of its own litigation, the group of seven former officials accuses Lehman’s officers of selfishly hoarding the $250 million D&O policy for themselves. SASCO also claims Fuld’s team threatened litigation if any portion of the insurance money was used to settle SASCO’s lawsuits.
For more details, read Reuters’ coverage.